What NOT to do when starting up-Vital don'ts of Entrepreneurship
Posted in Marketing & Strategy Articles, Total Reads: 1629
, Published on 08 November 2014
Here is a ‘golden’ perspective on the vital don’ts of Entrepreneurship
1. He’s selling ‘It’ ->He’s making gold ->I will sell ‘It’
This is probably the greatest mistake you will ever make! While selecting the product/service you would want to sell, always look at three things – Demand, Supply and Resources. Is there/will there be a demand for the product? What would be your competition? What is demand you can address? And, most importantly, do you have enough tangible as well as intangible resources to meet the demand? Then a critical analysis of the industry can be performed using the Porter’s five forces model. Product selection should not be imitative or impulsive, but well researched and thought out.
2. Gold is not my aim…Come on, I am a philanthropist!
Business is not charity.
People often tend to analyse the above statement in the light of CSR activities. That again, is a misconception. CSR activities are those which make a business liable to the society, as it is wholly dependent on it, for success. CSR, in no way calls for compromise on profitability. Even the concept of Social Entrepreneurship is largely misunderstood. Broadly speaking, it is about making products and services that would directly benefit the society, such as a generic drug or a cheap hearing aid but not making profits is no where in the theory!
3. Keep calm and gold will keep coming
Sustainability. Another very important aspect of Entrepreneurship. People often tend to think in the short run and ignore the long run. What is relevant today, will that be relevant tomorrow? What if the demand for the product is highly seasonal in nature? What about the competition you could face tomorrow? The plan has to be for a long term and the concept of the growing concern has to be borne in mind. Hence, Keep calm and think of the future!
4. Oh my VC, you will get gold
When looking for funds, the most crucial mistake people do is lay a much greater emphasis on projection of profits, compared to everything else! What most people fail to realise is, the VC is interested in a lot more things than just NPAT – the potential revenue growth rate, terminal growth rate, and most importantly - the risk involved and how you plan to hedge against it!
5. I want gold, too much gold
Bad pricing. Another terrible mistake businesses commonly make. Some tend to price it too low, making the customer perceive it as a cheap and hence worse alternative to the already existing product. Others, in order to showcase it as a premium product, fall into the even more dubious trap of pricing it too high! That again goes against them, especially in a country with a price sensitive mindset as that of India. ‘Why will I switch when I am getting tried and tested stuff at lower price?’ – says the consumer.
6. My name is Midas and I am not a miser!
Over expenditure. Again a chronic mistake made by most new ventures. Since funding is the one thing that start-ups lack the most, you simply can’t afford to be too spentive.
Save every single buck you probably can - you never know when you might need it! You may have to pay your employees less than competitors and compensate with other intangible benefits, source bulk discounts on raw materials or increase operational efficiency, but choosing not to save, is not a choice!
The bottom line - To err is human, to forgive is remembrance
Never expect miracles with a start-up. No matter what, mistakes will happen. The invincible formula for success, however, is to remember not to repeat them!
The article has been authored by Govind Agarwal, IMT Ghaziabad
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